Kerr & Christie - [2021] FamCA 624

FAMILY COURT OF AUSTRALIA
Kerr & Christie [2021] FamCA 624

File number(s): SYC 3851 of 2020

Judgment of: ALTOBELLI J

Date of judgment: 27 August 2021

Catchwords: FAMILY LAW – PROPERTY – interim distribution of funds– application for interim spousal maintenance – interim property adjustment or interim costs – application for a binding private ruling to be made by the Commissioner of Taxation in accordance with Division 359 of the Taxation Administration Act 1953 – complex asset pool – whether there exists capital gains tax liabilities – where one party is in a position of relative financial strength compared to the other – whether the husband ought to liquidate assets in order to fund litigation – interim costs order made – parties to attend conciliation conference – parties to make an application to the Commissioner of Taxation for a binding private ruling.

Legislation: Family Law Act1975 (Cth) ss 72, 74, 79, 80, 114

Cases cited:
Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856; [1999] FamCA 745

Cimorelli & Wenlack [2020] FamCAFC 58

Number of paragraphs: 25

Date of last submission/s: 1 June 2021

Date of hearing: 1 June 2021

Place: Sydney

Counsel for the Applicant: Mr Alexander

Solicitor for the Applicant: Russell Kennedy Aitken Lawyers

Counsel for the Respondent: Mr Richardson SC

Solicitor for the Respondent: Barkus Doolan
ORDERS

SYC 3851 of 2020

BETWEEN:
MR KERR

Applicant

AND:
MS CHRISTIE

Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

27 AUGUST 2021

THE COURT ORDERS THAT:
1.
The matter be referred back to the Docket Registrar for a Direction Hearing on

8 September 2021 at 2pm
for the purpose of making directions for the matter to proceed to Conciliation Conference and allocating a date for same.
2.In the event that the parties do not reach agreement in four weeks following the date of the Conciliation Conference, the husband, in his capacity as a director, shareholder and public officer of B Pty Ltd (“the company”), forthwith do all acts and things and make all payments and sign all documents, applications, authorities and provide all information and documents as necessary or required to apply to the Commissioner of Taxation for a Private Binding Ruling in accordance with the requirements set out in Division 359 of the Taxation Administration Act 1953 (Cth), asking:
(a)if the Commissioner is satisfied or thinks it reasonable to assume, that the majority underlying interests in the “Property C” and "Property D" E Town property owned by the company has been held by the same ultimate owners at all times from immediately before 20 September 1985 to now, and therefore, on disposal of the property, any capital gain arising to the company is disregarded; and/or
(b)if the Commissioner is not satisfied that the disposal of any property held by the company will not be exempt from any capital gain, a Ruling be made identifying the date which triggered the change resulting in that property being subject to capital gains

3.To give effect to Order 2:
(a)the husband…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Kerr & Christie

Details

AGLC: Kerr & Christie [2021] FamCA 624
Case: [2021] FamCA 624
Decision Date: 27 August 2021

CaseChat Overview and Summary

In the matter of *Kerr & Christie*, Altobelli J of the Federal Circuit and Family Court of Australia considered competing applications in complex property proceedings between a husband and wife. The parties, married in 1996 and separated in August 2019, have three adult children and a substantial asset pool valued at approximately $50 million. The wife controlled roughly $35 million of these assets, while the husband controlled approximately $15 million. The proceedings concerned the potential capital gains tax liabilities associated with assets held by a company, B Pty Ltd, and the husband's application for interim funding.

The court was required to determine two primary issues. Firstly, whether an order should be made for the husband to cause B Pty Ltd to apply to the Commissioner of Taxation for a Private Binding Ruling concerning capital gains tax implications on certain company properties. Secondly, the court had to consider the husband's application for an interim payment of $200,000, which he sought to cover his needs, including interim costs, up to and including a conciliation conference.

Regarding the Private Binding Ruling, the court reasoned that the existence of a potential capital gains tax liability could significantly affect the valuation of the husband's shares in the company and thus the overall property pool. To clarify this uncertainty, the court ordered that, should the parties not reach agreement at a conciliation conference, the husband must take all necessary steps to apply for a Private Binding Ruling. This ruling would seek to ascertain whether capital gains tax would be disregarded due to historical ownership or, if not exempt, identify the trigger date for any capital gains tax liability. The application was to be collaboratively prepared by the parties' respective accountants, and the husband was to provide full cooperation and disclosure to the Commissioner of Taxation and his wife. In relation to the husband's financial needs, the court ordered the wife to pay the husband the sum of $200,000 within 21 days of the order.

Orders

Orders of the court

SYC 3851 of 2020

BETWEEN:

MR KERR

Applicant

AND:

MS CHRISTIE

Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

27 AUGUST 2021

THE COURT ORDERS THAT:

The matter be referred back to the Docket Registrar for a Direction Hearing on

8 September 2021 at 2pm

for the purpose of making directions for the matter to proceed to Conciliation Conference and allocating a date for same.

2. In the event that the parties do not reach agreement in four weeks following the date of the Conciliation Conference, the husband, in his capacity as a director, shareholder and public officer of B Pty Ltd (“the company”), forthwith do all acts and things and make all payments and sign all documents, applications, authorities and provide all information and documents as necessary or required to apply to the Commissioner of Taxation for a Private Binding Ruling in accordance with the requirements set out in Division 359 of the Taxation Administration Act 1953 (Cth), asking:

(a) if the Commissioner is satisfied or thinks it reasonable to assume, that the majority underlying interests in the “Property C” and "Property D" E Town property owned by the company has been held by the same ultimate owners at all times from immediately before 20 September 1985 to now, and therefore, on disposal of the property, any capital gain arising to the company is disregarded; and/or

(b) if the Commissioner is not satisfied that the disposal of any property held by the company will not be exempt from any capital gain, a Ruling be made identifying the date which triggered the change resulting in that property being subject to capital gains

3. To give effect to Order 2:

(a) the husband shall make an application for a private ruling in the approved form to the Commissioner of Taxation;

(b) that application is to be collaboratively prepared by the accountant/advisor for the husband and the accountant/advisor for the wife and each party's accountant/advisor is to agree to the final version of the Private Binding Ruling to be submitted;

(c) the husband shall answer all requests for information and documents from the Commissioner of Taxation in a timely manner;

(d) the husband shall confirm in writing that the information provided in the final Private Binding Ruling is true and correct, provide a copy of that confirmation in writing to the wife, and confirm the accountant/advisor is authorised to submit the application; and

(e) the husband shall provide to the wife a copy of all communications and correspondence between himself and or his agents, and the Commissioner of Taxation in respect of this issue, within seven days of sending/receiving any such communication and or correspondence.

4. Pursuant to s 117(2) of the Family Law Act 1975 and within 21 days of the date of this order, the wife is to pay to the husband the sum of $200,000, such sum to be paid into an account nominated by the husband.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

These reasons for judgment explain interim orders that have been made in a complex property matter.BACKGROUND The husband is the Applicant in substantive proceedings for alteration of property interests, but is the Respondent in the present application. He is 56 years old and describes himself as a farmer. The wife is the Respondent in the substantive proceedings, but is the Applicant for present purposes. She is 55 years old. The parties commenced cohabitation in 1995, and married in 1996. They have three adult children aged 22, 20 and 18 at the time of the interim hearing. They separated in August 2019. The present proceedings commenced in June 2020. The husband lives in Sydney, and the wife lives in the F Region of New South Wales. It is common ground that the net pool of assets has a value in the vicinity of $50 million. The wife controls about $35 million of that and the husband about $15 million.THE COMPETING APPLICATIONS As a result of negotiations and sensible compromise between the parties, no doubt assisted by their solicitors and counsel, I was able to make consent orders in relation to disclosure issues, as well as the division of personal property. Two issues therefore remained for determination. In Order 2 set out in the wife’s Case Outline document filed 27 May 2021 she sought an order that the husband, in effect, cause a company known as B Pty Ltd (‘the company’) to make an application to the Commissioner of Taxation for a Private Binding Ruling (‘BPR’) in relation to capital gains tax issues pertaining to the assets held by the company. This was on the basis that the wife would fund the cost of such application, and that the application would be made as soon as possible. Should the Court order the parties to attend a conciliation conference, then the wife would be prepared to postpone the application until after any unsuccessful conciliation conference. The husband opposed the making of such an order for the time being. He preferred that the matter proceed to a conciliation conference as soon as possible, but subject to the other order he sought which will be discussed below, any further consideration about the need for a BPR be adjourned until after the conciliation conference. The Court notes that the issue is whether there is a capital gains tax liability which affects the value of the shares held by the husband in the company. The impression formed by the Court is that the husband seems more confident than the wife that there is no capital gains tax liability and thus he was prepared to attempt to negotiate a settlement on this basis. The second issue relates to the orders sought by the husband in Orders 5-8 of the minute of order provided to the Court by his lawyers before the interim hearing. In effect, he sought a sum of money pursuant to a number of alternative heads of power. At the hearing itself, the husband amended his proposal so that he sought $200,000 to cover his needs, including interim costs, up to and including the conciliation conference and on the basis that a further application would be made after that date, should the matter not settle. The wife strenuously opposed the making of this or any order for funding, particularly having regard to the husband’s asset position.THE MATERIAL BEFORE THE COURT

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File number(s):	SYC 3851 of 2020
Judgment of:	ALTOBELLI J
Date of judgment:	27 August 2021
Catchwords:	FAMILY LAW – PROPERTY – interim distribution of funds– application for interim spousal maintenance – interim property adjustment or interim costs – application for a binding private ruling to be made by the Commissioner of Taxation in accordance with Division 359 of the Taxation Administration Act 1953 – complex asset pool – whether there exists capital gains tax liabilities – where one party is in a position of relative financial strength compared to the other – whether the husband ought to liquidate assets in order to fund litigation – interim costs order made – parties to attend conciliation conference – parties to make an application to the Commissioner of Taxation for a binding private ruling.
Legislation:	Family Law Act1975 (Cth) ss 72, 74, 79, 80, 114
Cases cited:	Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856; [1999] FamCA 745 Cimorelli & Wenlack [2020] FamCAFC 58
Number of paragraphs:	25
Date of last submission/s:	1 June 2021
Date of hearing:	1 June 2021
Place:	Sydney
Counsel for the Applicant:	Mr Alexander
Solicitor for the Applicant:	Russell Kennedy Aitken Lawyers
Counsel for the Respondent:	Mr Richardson SC
Solicitor for the Respondent:	Barkus Doolan

ORDER MADE BY:	ALTOBELLI J
DATE OF ORDER:	27 AUGUST 2021